SUPREME COURT CASE OF IMPORTANCE FOR DEVELOPERS

In Koontz v. St. John’s River Water Management District, a property owner sought monetary damages for the denial of a permit to develop a parcel of land in Florida. The property contained slightly less than 15 acres, and because much of it would have significant environmental impacts, the owner offered to develop approximately 3.7 acres and grant the St. John’s Water Management District (“District”) a conservation easement on approximately 11 acres. The District determined that was insufficient and offered either to allow a one-acre development or allow the owner to pay money to allow the District to perform off-site mitigation on District-owned land. The owner found these alternatives offered by the District to be excessive, and sued for monetary damages claiming an unconstitutional taking without just compensation.

The U.S. Supreme Court, reversing the Florida Supreme Court, found the District’s demands rose to the level of a taking. The Court relied on two earlier cases, which apply the unconstitutional conditions doctrine to takings cases that involve applications for land use permits. The unconstitutional conditions doctrine prevents government from imposing conditions on a private party which would force that party to surrender its constitutional rights. The Court found “(e)xtortionate demands for property in the land-use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation.” The Court further explained that had the government tried to take the conservation easement outside of the permitting context, a taking would have occurred.

The Court also found that notwithstanding the fact that the government may require payment of fees rather than the surrender of property for public use, a taking may still be found to have occurred if there is a link between the funds requested and an identifiable piece of real property. The Court downplayed the notion that the decision would cause difficulties for local governments in deciding whether a payment demand would be seen as a legitimate tax or user fee or an impermissible taking.

As implied by the dissenting opinion written by the minority judges, the Koontz decision, while a victory for private property rights, may in the long run impact development in unintended ways. The dissent suggests that the District, rather than making demands, was offering the owner various alternatives to an outright permit denial. Rather than continue to work with the District, the owner chose to sue for damages. In light of that, they imply that governmental agencies, such as the District, may decide it is safer to merely deny a permit than try to negotiate with a developer and run the risk of being sued for a taking.

We will continue to monitor the impact of this case on development in Florida as it is reviewed and processed by local governments and will update you through our continuing series of blogs. We encourage industry followers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.